Correlation Between Havila Shipping and Eidesvik Offshore

Can any of the company-specific risk be diversified away by investing in both Havila Shipping and Eidesvik Offshore at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Havila Shipping and Eidesvik Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Havila Shipping ASA and Eidesvik Offshore ASA, you can compare the effects of market volatilities on Havila Shipping and Eidesvik Offshore and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Havila Shipping with a short position of Eidesvik Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Havila Shipping and Eidesvik Offshore.

Diversification Opportunities for Havila Shipping and Eidesvik Offshore

-0.26

Correlation Coefficient

Havila Shipping  Eidesvik Offshore

Very good diversification

The 3 months correlation between Havila and Eidesvik is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Havila Shipping ASA and Eidesvik Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eidesvik Offshore ASA and Havila Shipping is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Havila Shipping ASA are associated (or correlated) with Eidesvik Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eidesvik Offshore ASA has no effect on the direction of Havila Shipping i.e., Havila Shipping and Eidesvik Offshore go up and down completely randomly.

Pair Corralation between Havila Shipping and Eidesvik Offshore

Assuming the 90 days trading horizon Havila Shipping ASA is expected to under-perform the Eidesvik Offshore. In addition to that, Havila Shipping is 2.53 times more volatile than Eidesvik Offshore ASA. It trades about -0.22 of its total potential returns per unit of risk. Eidesvik Offshore ASA is currently generating about 0.02 per unit of volatility. If you would invest  1,362  in Eidesvik Offshore ASA on November 20, 2024 and sell it today you would earn a total of  16.00  from holding Eidesvik Offshore ASA or generate 1.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Havila Shipping ASA  vs.  Eidesvik Offshore ASA

Havila Shipping ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Havila Shipping ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Eidesvik Offshore ASA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eidesvik Offshore ASA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Eidesvik Offshore is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Havila Shipping and Eidesvik Offshore

The main advantage of trading using opposite Havila Shipping and Eidesvik Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Havila Shipping position performs unexpectedly, Eidesvik Offshore can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Eidesvik Offshore will offset losses from the drop in Eidesvik Offshore's long position.

The idea behind Havila Shipping ASA and Eidesvik Offshore ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.